Basic financial statements are essential tools that businesses use to communicate their financial performance and position to stakeholders, including investors, creditors, and management. These statements provide a snapshot of a company’s financial health and are crucial for decision-making, analysis, and transparency.

• Balance Sheet: The balance sheet, also known as the statement of financial position, presents a company’s assets, liabilities, and equity at a specific point in time. It shows what the company owns (assets), what it owes (liabilities), and the difference between the two (equity). The balance sheet equation is Assets = Liabilities + Equity.
• Income Statement: The income statement, also called the profit and loss statement, summarises a company’s revenues, expenses, gains, and losses over a specific period, typically a month, quarter, or year. It provides insights into the company’s profitability by showing whether it generated a net profit or incurred a net loss during the period.